State Bank of India ADR (SBKJY)
Q3 2023 Earnings Conference Call
February 3, 2023 7:30 PM ET
Company Participants
Sanjay Kapoor - General Manager for Performance, Planning and Review Department
Dinesh Khara - Chairman
Charanjit Surinder Attra - Chief Financial Officer
Ashwini Kumar Tewari - Managing Director, Risk, Compliance and SARG
Conference Call Participants
Mahrukh Adajania - Nuvama
Rahul Jain - Goldman Sachs
Ashok Ajmera - Ajcon Global
Anand Dama - Emkay Global
Abhishek Murarka - HSBC
Kunal Shah - Citigroup
Jay Mundra - B&K Securities
Adarsh Parasrampuria - CLSA
Prakhar Agarwal - Elara Capital
Manish Ostwal - Nirmal Bang
Manish Shukla - Axis Capital
Presentation
Operator
[Starts Abruptly]
Performance Planning and Review, from State Bank of India. Thank you, and over to you.
Sanjay Kapoor
[Foreign Language] and good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I'm the General Manager for Performance, Planning and Review Department of the bank. On behalf of the top management of SBI, I extend a warm welcome to all of you joining us today on SBI's Q3 FY ‘23 Earnings Conference Call.
On the call today, we have with us our Chairman, Mr. Dinesh Khara; Mr. C.S. Setty, Managing Director, International Banking and Global Markets and Technology; Mr. Swaminathan J, Managing Director of Operating and Subsidiaries; Mr. Ashwini Kumar Tewari, Managing Director, Risk, Compliance and SARG; Mr. Alok Kumar Choudhary, Managing Director, Retail Business and Operations; Mrs. Saloni Narayan, Deputy Managing Director of Finance.
To carry forward the proceedings, I request the Chairman sir to give a brief summary of the bank's Q3 FY ‘23 performance and the strategic initiatives undertaken. We shall thereafter straight away go to the question-and-answer session. However, before I hand over to Chairman sir, I would like to read out the safe harbor statement.
Safe harbor provision. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors.
Thank you. Now I would request Chairman sir, to make his opening remarks.
Dinesh Khara
Thank you. Thank you very much. Good evening, ladies and gentlemen. Thank you for joining this analyst meet post announcement of the quarter three results of the financial ‘23. The Indian economy has exhibited remarkable resilience through 2022 in the face of the deteriorating global situations triggered by Russia-Ukraine war, monetary policy tightening and recurring waves of the pandemic on the back of the strong financial and macroeconomic fundamentals.
An important factor in the overall outcome has been the measured response of the monetary and fiscal policies in sharp contrast to the aggressive tightening worldwide. The New Year brings hope for continued momentum in India's growth story, backed by the sustained strength in domestic demand. The World Bank has gone on record to say that the nation was well placed to steer through any potential global headwinds in 2023.
The IMF have also said that India remains the bright spot and would account for the significant portion of the global growth in 2023. Several high frequency activity indicators like vehicle sales, petroleum consumption, railway passenger traffic, air traffic, RTO revenue collections, fertilizer sales have all shown improved y-o-y momentum in quarter three of financial ‘23.
GST revenue also continues to remain robust with 15% higher revenue in quarter three compared to the same period last year. In financial ‘23, credit growth has continued to grow in double digits. The incremental nine-month credit growth has doubled in financial ‘23 compared to financial ‘22. Credit growth in the system is currently at 14.9% as against 9.2% in last year. The good thing is that, credit growth has got base and not limited to a few industries or sectors. So we expect the pace to continue in the next financial year also, but some audition can happen.
At State Bank of India, we have always maintained that our long-term strategy is to build sufficient resilience in our balance sheet. So while we've continued to pursue growth in core operating income, we have also been proactive in identifying any potential risks and build adequate presence for the same. And our operating results for the quarter are aligned with our long-term strategy.
I'm pleased to announce that for the second quarter and running, we have again posted our highest ever quarterly profit at INR14,205 crores, our wages growth numbers are strong, and in terms of asset quality, our gross NPAs have dropped to its lowest level in more than six years.
Let me now give some color on the Bank's number for this quarter. Net profit for the quarter increased by 68.47%, Y-o-Y to INR14,205 crores, while operating profit at INR25,219 crores increased by 36.16%. ROA at the Bank for the nine months period improved by 23 basis point on Y-o-Y basis and it stands at 0.87%, and ROE improved 458 basis points on Y-o-Y basis and it is at 18.59%.
Most other core profitability metrics have also improved over previous year, as well as sequentially, net interest income increased by 24.05% Y-o-Y on the back of improvement in yields and continuing credit offtake. Domestic NIM also grew by 29 basis point Y-o-Y and 14 basis point sequentially.
Non-interest income grew by 32.22% Y-o-Y. Operating expenses increased by 16.69% as we have started building provision for the wage revision, which has fallen due from November ‘22. Other than that, our overhead expenses as well as staff costs are within control and our cost to asset continues to remain among the lowest in the industry, reflecting our efforts to build a long-term cost efficiency.
On the wages front, the growth momentum in domestic credit offtake has continued in this quarter also with growth coming from all segments. Domestic advances grew by 16.91% Y-o-Y headlined by retail personal advances which grew by 18.10% Y-o-Y and corporate segment which grew by 18.08% Y-o-Y. SME and agri advances also posted double-digit growth at 11.52% and 14.16% Y-o-Y, respectively.
Our personal retail loan book, excluding housing segment has crossed the milestone of INR5 trillion. Domestic deposit grew by 8.86% Y-o-Y, driven by growth in savings bank deposits and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as deposit.
Coming to asset quality, we continue to post improving outcomes, our gross NPA has dropped below INR1 trillion and stands at INR98,347 crores. In terms of ratio, our GNPA has come down by 136 basis point on a Y-o-Y basis and stands at 3.14%. Our net NPA ratio has also declined by 57 basis points and stands at 0.77%. Slippage ratio for the quarter stands at 0.41%, consistently improving asset quality is also reflected in our credit cost which is at 21 basis point for the quarter and is down by 28 basis points on Y-o-Y basis.
On the restructuring fund, our total exposure under COVID Resolution Plan 1 and 2 stands at INR26,035 crores. As at the end of quarter three of financial '23, the restructuring book has behaved well with almost around 10% of the current exposure falling under SMA1 and SMA2. We are holding sufficient additional provision against the restructured account.
The Bank remains well capitalized, and we expect that our internal accruals will be adequate to take care of the normal business growth requirements. Our capital adequacy ratio without adding profit for the nine months stands at 13.27% and CET ratio at 9.26%, well above the regulatory requirements.
Digital continues to be an important acquisition engine for the Bank across assets as well as liability products. During the quarter, we have sourced 64% of the savings bank accounts and 41% of the retail accounts, retail asset accounts digitally through YONO. Our subsidiaries have also consistently performed well and continue to create significant value for all the stakeholders and, most importantly, for the customers. Most of our subsidiaries are leader in their respective segments, we will continue to nurture these subsidies and see them creating value for their own shareholders and as well as the shareholders of SBI.
Now before I conclude, I thank you for your continuous support for the Bank. We consider it a privilege to be able to contribute towards the growth of our economy. We remain committed to reward your trust in us with superior sustainable returns over the long-term. I wish everyone here good health and very happy weekend.
The floor is now open for your questions. Thank you.
Question-and-Answer Session
Operator
Thank you very much. [Operator Instructions] We have our first question from the line of Mahrukh Adajania from Nuvama. Please go ahead.
Mahrukh Adajania
Hello sir, good evening. Sir, a couple of questions. Firstly, the write-offs are slightly higher this quarter. So, if you could explain and also on trading gains, the -- I mean, the profit -- the treasury bid, why does it look so high this quarter? So, these are my first two questions, and then I have one more.
Dinesh Kumar Khara
Yes. write-off is in the normal course of rates. It is nothing very unusual. I think it is about INR10,000-odd crores. There's a write-off amount. And it is in the normal course of business. So nothing very unusual.
Mahrukh Adajania
So, it was INR3,000 crore last quarter, right?
Dinesh Kumar Khara
Yes. I think normally, we undertake write-offs towards the third quarter and the fourth quarter. So that is why it has -- this kind of tend to see this year, and it has not there in the past.
Charanjit Surinder Attra
On the treasury part.
Dinesh Khara
Yes, on the treasury part.
Charanjit Surinder Attra
On the treasury part, it also includes the markup write-back of the MTM because the MTM requirement has come down. The mark-to-market losses have come down. So that is getting reflected in the treasury account.
Mahrukh Adajania
Got it. Sir, and in your exposure to a large group in press, you've made some comments that is 0.86% of total exposure, but what is the total exposure because we get to see only your gross advances so and your part.
Dinesh Khara
At 0.88% of our loan book, which is INR31 lakh crores and odd.
Mahrukh Adajania
Okay. Okay. Got it. And this includes all the sanctions across all offices?
Dinesh Khara
It's outstanding exposure across all offices.
Mahrukh Adajania
Outstanding. Okay. Okay. So -- but sir, you wouldn't talk about your sanctions?
Dinesh Khara
I think as of now, what is material is that only.
Mahrukh Adajania
Okay. But if we can get up because like PNB disclosed their sanctions, right? So...
Dinesh Khara
It is there and normally, we don't entertain questions relating to a particular account, because there's a customer privacy issues involved.
Mahrukh Adajania
Okay, sir. Sir, and if I can squeeze in just one last question. What do you think is the outlook on deposit growth and therefore margins, right? You've done -- your operating performance has been phenomenal. Deposit growth is not great, but you don't even need it because you have been running the lowest CD ratio once the lowest CD ratio in the industry on the domestic front.
So, what is the outlook on deposit growth and therefore, margins from here on? When do you -- do you think margins sustain at the 3Q levels? Do they drop? When do they drop? How does deposit growth accelerate?
Dinesh Khara
As of now, we are having excess SLR to the tune of about INR3.2 trillion. And we are very mindful that I've said it in the past also deposited the franchise, and we always remain mindful of the depositor interest. So, in the buckets where we feel that we can attract the retail deposit, we are ensuring that we must be in line with the market trends. And that's the policy which we have adopted, and we'll continue to follow that.
So based upon that, since you are also acknowledging the fact that we still have one of the lowest credit deposit ratio. Depending upon the need, we will be calibrating our interest rates. But I would also like to mention that our -- about 74% of the loan book is linked to either EBLR or MCLR. And although the 74%, I would say about 40% would be on account of MCLR. And if at all, we increase the deposit interest rates, that will also give us algorom for increasing the MCLR and which will help us in ensuring that the NIM should not get adversely affected.
Mahrukh Adajania
Okay. So more or less stable NIM from hereon?
Dinesh Khara
I expect that hopefully.
Mahrukh Adajania
Okay, sir. Perfect, thank you. Thanks a lot, sir.
Operator
Thank you. We have our next question from the line of Rahul Jain from Goldman Sachs. Please go ahead.
Rahul Jain
Thanks. Good evening, sir. Just a couple of questions. Number one on the provisioning bid, so we've seen a jump in standard asset provision in this quarter and I think outstanding standard asset provisions were about INR23,000 crores. So just wanted to understand why are we carrying such a large provisions here, is there an element of contingency also that has been factored in here?
Dinesh Khara
Yes, there is one-off costs when our loan book has grown, that has also led to an increase in provisioning because we are required to maintain standard provisions for standard assets also. Secondly, of course, we are always very mindful of, if at all, we get to see any kind of a stress on the ground in any of the accounts. We do make some provisions which are floating in nature, and much of it will depend upon how the account at what is a trajectory of the account and accordingly, we crystallize those provisions. So partly it is on account of our increase in the loan book and partly, it is on account of our policy in terms of making the provisions proactively as against -- after the event.
Rahul Jain
Sir, this translates into roughly about 75 to 80 basis points of the loan. So fair to say 30 to 40 basis points may have been built just for any future contingencies.
Dinesh Khara
Yes, would be like. As I mentioned that if at all we get the visibility of any kind of a stress in our own loan account, we rather believe in making provisions.
Unidentified Company Representative
I mean it is across the sector.
Dinesh Khara
It is across the sector. Yes, it is not the corporate book only.
Unidentified Company Representative
And that is the standard asset provision.
Dinesh Khara
Yes, yes.
Rahul Jain
Got it. Thanks. Sir, just on this provision for employees of INR5,429 crores in this quarter. So, what is the element of one-off here? Or this is going to be the recurring quarterly number?
Dinesh Khara
No, we have a provision relating to our revision, which is about INR996 crores is on account of that. And other than that, the provisions which have been made based on the astute assessment for lower retirement liabilities, et cetera. So, it is as per the yes.
Rahul Jain
So, and this INR996 crores, would you be making this every quarter, additional provisions?
Dinesh Khara
On an average about it is for every month, it comes about most about INR500 crores every month. That will be the provisions which will be required to meet the liability relating to the wage revision.
Rahul Jain
Sorry, I missed out on the number. Can you please repeat?
Dinesh Khara
Sorry?
Unidentified Company Representative
Around INR500 crores…
Dinesh Khara
No, about INR996 crores is something which we have provided for. And this is a provision for two months' time. Okay? And apart from that, about INR500-odd crores. So, every month, INR500 crores will be the provision for the major reason. And apart from that, some provisions, we have made on account of the pension and gratuity liabilities, which is essentially on account of the discount rate and also as for the recommendations of that gratuity.
Rahul Jain
Sir, just 1 more question. Again, going back to the exposure that is, of course, in the public discourse. Can we get some more colour as to the exposure.
Dinesh Khara
I think towards the end of this week, I mean, after I complete all your answers, I will make some statements, comprehensive statement relating to the exposure to that particular group.
Rahul Jain
Sure sir. I'll wait for that. Thank you.
Operator
Thank you. We have our next question from the line of Ashok Ajmera from Ajcon Global. Please go ahead.
Ashok Ajmera
Complements to you, Khara saab and the entire team. I think for the mind blowing profit, one of the highest I think operating profit in last maybe four, five years, even in the net profit, even the asset quality has improved tremendously, overall performance of the bank is so robust that even if there is any problem concerning to this large group, which may not be even in the top 15 group of your -- as far as the exposure is concerned, I don't think the bank like State Bank of India will have any problem when you're operating profit itself is INR26,000 crores per quarter.
So having said that, sir, we will wait for your final comments on the total overall exposure to this growth fund based, non-fund based, bond, equity, foreign bonds which you have assured that you will give the statement at the end of the question-and-answer session. Having said that, sir, I have some couple of -- some data points and some information, we have gone slow in this quarter on the corporate credit, so what is our basically ratio which will settle down If you take the whole FY ‘23 by March the composition between the RAM and the corporate?
Dinesh Khara
I think it will be more or less where it is in the month of December. It will be -- marginal movement for many of the segments, but it would be more or less on these lines only.
Ashok Ajmera
All right, sir. Sir, if we go on the income side, the other income has gone up to INR11,467 crores from INR8,870 crores in the last quarter, and I think the major part of it is they come from treasury profit. So, profit and sale and revaluation of the treasury is INR2,937 crores as against INR457 crores in the last quarter, whether this trend is going to be continued in the coming quarter January March also and how do we see now with the interest rate almost peaking up maybe another 25 basis points, where do we stand on the treasury side, sir?
Dinesh Khara
So, as well as the treasury slide is concerned, there are two components; one of course is the improvement in yield on investment. And secondly, in this quarter, we have booked some MTM gain which is about INR2,200-odd crores, which is more of a write-back because, if you recall, in the first quarter, we had made MTM loss which was about INR7,500 crores.
Out of that, we had some MTM gain last quarter also, which we did not book. For the reason that we had seen that yields were somewhere it has again shooted, so that is the reason why we did not booked at that stage, but now we have seen that yields are now coming within the range and that's the reason why we have done this.
So, I think that is the major reason when it comes to the movement, we are observing in the treasury such as ours. Other item is, we had some derivatives which are again rupee dollar swap, which we have done. So, some loss component is there on those derivatives, so that is also booked in that particular head.
Ashok Ajmera
Sir, our credit cost and cost to income ratio both have improved tremendously, do we see this trend to continue, like cost to income coming down and the credit cost both are come down even at this low level, in this coming...
Dinesh Khara
I think quarter ending March ‘23, I can say for sure. And I think we will be in a position to give some guidance as we move further, depending it will be -- it will also be the function of how the economy in general macro economy will be moving. But nevertheless, as of now, it looks like that for the quarter ending March ‘23, we should not be -- we should have a similar credit costs.
Ashok Ajmera
My last question in this round sir is on PLI, how much provision on PLI, the Bank has made for the nine months, because you have done the...
Dinesh Khara
[Multiple Speakers] provision would be in line with what the number is likely to be, the cost is -- it could not be very significant amount and it would be very small number, which is there. So, it is for 5% increase, it is five days salary. And for 10%, it will be10 day salary, so it would not be very significant component.
Ashok Ajmera
Okay, sir. But we have provided for -- we have already made the provision process?
Dinesh Khara
That's always there. Now we have so many pockets where we are keeping so much of non-NPA provision as I hear about INR33,000 crores.
Ashok Ajmera
Yes, sir. I think the concern of the market is an absolutely unfounded, but anyway all the best to you. I think the sooner or later, the bulk market will understand the economics of the bank of the bank and the financial. Thank you very much and all the best to you, sir.
Dinesh Khara
Thank you very much, Ashok.
Operator
Thank you. We have our next question from the line of Anand Dama from Emkay Global. Please go ahead.
Anand Dama
Yes, thank you sir for the opportunity. Sir, we've heard about lot of resolutions in the pipeline right now like SKS power and all, do we have any resolution pipeline particularly for the fourth quarter and over the next six to nine months that we can talk about?
Dinesh Khara
There are so many resolutions in pipeline such as but it penetrates lies because it is always a process which is carried out in all these matters and how much time will be taken at each of the step is actually at times is not very certain. So that is one of the reasons why saying it so much of uncertainty that in the last quarter, we'll have so many resolutions coming through, it will not be in order for us. But nevertheless, I'll ask Mr. Tiwari if at all he can throw some -- he can give some colour in this direction.
Ashwini Kumar Tewari
Many cases which are in primary stages, but we cannot be sure and theoretically there is legal proceedings tough to give a timeline or a date. And sir, I give some high-level numbers high level. I'll give you high level number going forward in the quarter.
Anand Dama
Sure, sir. That would be great. Sir, secondly is the outlook on margins. I think this quarter also we have seen a meaningful margin uptick. We still have some room in terms of earlier improvement. And as you said, that MCLR also would increase as basically the cost increases.
Dinesh Khara
So, I would suggest that let us keep -- as guidance part is concerned, I would like to keep the guidance at this level and if at all they'll be room for improvement, we'll certainly ensure that. Incidentally, in this NIM also it would have been even better, but because in the last year we had the income tax refund because as high as about INR2,400 crores as against that, but this year we have got income tax refund, which is as about INR800 crores. Interest on income tax refund, so that is the other reason, it will have an impact towards excellent basis points overall. But yes, of course, if at all, we do apple-to-apple comparison, for us, the impact change can be even better, so this is just for information.
Anand Dama
Yes, sure. I think that should also play out in the fourth quarter, right, like structurally?
Dinesh Khara
Yes hopefully, let's hope for the best.
Anand Dama
Yes, okay sir. Thanks a lot.
Dinesh Khara
Sure.
Operator
Thank you. We have our next question from the line of Abhishek Murarka from HSBC. Please go ahead.
Abhishek Murarka
Hi sir, good evening. Actually, just one request when you make a comment on the large conglomerate, if you could clarify whether this INR27,000 crores includes LC/BG in non-fund based and overseas loans. So just at the cost of repetition is requesting that. And also, if you could also clarify that is there a refinance opportunity given that you said that...
Dinesh Khara
Based out of the second one.
Abhishek Murarka
The second one is, if there's a refinance opportunity given that your large exposure framework wise, there is lot of headroom and the group like several projects appear to be credit-worthy, then would you do it. So just these two things if you could cover in your comment, maybe now or later whatever that would be very useful?
Dinesh Khara
I think second question, I can answer you right now that is if at all any refinance opportunity is always evaluated on merits. So, for me to say that anything right now will not be in order and as when any such demand will come, we have not received any such demand or any such request, if at all any such request will come, it will be evaluated on your merit and while evaluating we're always very mindful in terms of the stake of the promoter or of the entrepreneur and risk which it is, and based on that very comprehensive assessment only, views are taken. It is not merely simply one request comes and we run the facilities.
Abhishek Murarka
Understood, sir. That's useful. And my second question is actually on international loans, now sequentially there's been flat issue I think couple of quarters back we were talking about being a little aggressive there then looking for opportunities outside. What is the outlook there, sir, next one year, are you looking to grow that maybe to higher percentage of loans or what's the strategy?
Dinesh Khara
In terms of dollar, our international book has grown by about 9.15% and though when it comes to dollar rate -- when we convert on the dollar rate, it looks like that it is growing at 20% plus, but the factor is dollar in terms of dollar, it is just about 9.15%. And now our focus is in for improving the NIM as far as our international is concerned. So that is the reason you might have observed that our NIM's have improved significantly we're move towards 1.67 as for our international NIM's are concerned and it is on a quarter-on-quarter basis, an improvement of over 23, 24 basis point. So that's how it is.
And when it comes to composition of the international book, it is essentially local lending and those markets which is not necessarily to the Indian corporates only, it is too -- even to the local corporates and we are participating in the local syndications. And also, when it comes to India linked loans, they are majorly ECB's and ECB's to either AAA or AA rated entities only, and that's all this whole complexion is.
Apart from that, last component to trade finance, trade finance group, wherever we are getting the margins, we are participating on the platforms and wherever we are in efficient to get the margins there we are actively involved.
Abhishek Murarka
Sure sir. Margins in the international book should hold up around current levels?
Dinesh Khara
I hope that we should be in efficient to maintain at this level, if not improve.
Abhishek Murarka
Perfect, sir. Thank you. And just one question I squeeze in. On SME, no for several quarters that book was not really growing, as this quarter there is about, I think 10% Q-o-Q jump in that book. So, if you could share this -- what has changed, is it a change in product geography, customer focus, what has really changed over there and whether this is sustainable?
Dinesh Khara
Yes. We have -- in SMA, we have invested well in terms of structures, in terms of capacity building and also in terms of focus. That is something which has been brought in for last year plus and the results we have now in efficient to see, last quarter also we saw a decent growth in SMA book and this quarter also we are seeing a decent growth in SMA book.
And, I would like to mention that we are having a focus on the distributor finance, vendor finance, balance sheet this lending and also, we have come out with another loan product, which is essentially run through YONO which is a pre-approved business loan where we are looking into the transactions and current accounts, and based upon their transactions were in efficient to offer the loans to also such entities also which are actually small in nature. But this is something which is becoming very popular. So, these are some of the contributing factors and we have grown SMA by almost for INR43,000 crores on a year-on-year basis and these are some of the contributing factors.
It has become a continuous focus area and also, we are very mindful in terms of quality of our lending and we are -- we have created a loan management system where we are having a adequate visibility in terms of the unstructured information through the GST and et cetera, et cetera. So that way, we have significantly strengthened our underwriting practices in SMA, we have invested in terms of manpower, we have invested in terms of product. So, all that is showing up, and to my mind, it is sustainable. We have set a target for reaching 4 trillion number by the year March ‘24 but the way things are we should be very near to that by March ‘23.
Abhishek Murarka
Perfect, sir. Thank you for that excellent color and all the best for future quarters. Thank you so much.
Dinesh Khara
Thank you very much.
Operator
Thank you. We have our next question...
Dinesh Khara
Just one sec. Mr. Tewari has to contribute something.
Ashwini Kumar Tewari
So, there is a question about how much recovery resolution we can expect. So, basis the past record plus the recovery already done and subject to of course the court decision in few cases, we should have a number between INR3,000 to INR3,500 in quarter four.
Operator
Thank you, sir. We have our next question from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yes, congratulations, good set of numbers. So firstly, sorry, just to touch upon in terms of the recoveries and upgrades. So, ex of the resolution, which you have highlighted maybe the run rate which is there for this quarter of INR1,700 odd crores should that be the normalized one or this is relatively on the lower side?
Dinesh Khara
Actually recoveries, which you are seeing here also we have to keep in mind that last year about INR1,692 crores was on account of a particular account, which was one account. So, if we ignore -- if at all, we have to do the apple-to-apples comparison then perhaps our growth in recovery this quarter, as I would was 18% to 20%.
So, I think we expect that going forward we don't have chunky accounts which are awaiting resolutions and perhaps it might take a little longer also but nevertheless the efforts which have been put in, in terms of OTS, in terms of NARCL and those things have helped us in sort of ensuring that recovery has happened faster and we expect that we should be in a position to maintain this kind of a number at least in this quarter also.
Kunal Shah
Sure. So compared -- when we look at it, say, in Q1, Q2 it was somewhere around INR5,200 odd crores, last whole year it was INR21,000 crores in terms of recoveries plus upgrades compared to maybe almost like INR1,600 crores number for this quarter. So, you are saying maybe ex of any resolutions this can ideally be the run rate even though focus is there in terms of improving it?
Dinesh Khara
Actually, since you would have observed that the stock has come down quite a lot. It is now less than INR100,000 crores, so that itself will leave the, these are also -- the amount is also small in each of the cases. So, each of the resolutions, when it comes to effort, it takes almost the same amount of effort, but the recovery may not be as commensurate to efforts. So that's why number may look small, but in terms of the recovery, it will be a sustained effort and normally we get to see some better recovery in the last quarter, we hope that there would be a marginal improvement over what we have done in this quarter.
Kunal Shah
Sure. And secondly, in terms of the corporate exposure and say getting into Infra, there is some rundown of almost INR15 odd crores say on telecom and even in power. So, is it more of repayment of the account or is it a refinancing at the lower rate by the competitor, what is actually leading to that and what would be the overall outlook on the corporate credit growth?
Dinesh Khara
The corporate credit growth we have got proposals in pipeline as high as about INR1.9 trillion and where weldment is yet to be taken both in term loan and working capital underutilization that could be as a concerned INR10 trillion. So overall, about INR3 trillion is the number in the corporate book, which we are having some possibility of converting into at least unutilized well certainly happen but one positive trend, which I must mention is relating to the availment of the term loans under non-availment of term loan has come down quite a lot and that still -- that is normally toggles well because generally after that the working capital improves. So, I think with that kind of a scenario I expect even working capital utilization will also improve, it has come down from about 56% to 54%, but we have also seen the increase in credit growth up which -- sanctioning has gone up by about 24% as far as the large corporate credit is concerned. So, I think overall, I expect that we'll have a good visibility of opportunities coming in here and also the quality loan we should be in a position to next.
Kunal Shah
Okay. And on telecom exposure and power, anything specific particularly in this quarter. INR15,000 crores of rundown in telecom?
Dinesh Khara
This is actually year-on-year run down, this Slide number 10 carries the year-on-year reduction and this is usually repayment as well as the reduced utilization and customer accounts.
Kunal Shah
Okay. Yes, so compared to like September, September also it was almost INR43,000 crores, INR44,000 crores and that's down to 20...
Dinesh Khara
The PSU was also- there as when they have-- there would be some repayment which would have come that is...
Kunal Shah
Okay. So, these are the repayment, it's not like refinancing and maybe some a rate competition and losing out to the competition - maybe?
Dinesh Khara
No, No. Not at all.
Operator
Thank you. We have our next question from the line of Jay Mundra from B&K Securities. Please go ahead.
Jay Mundra
Hi, sir, good evening. Sir, last time you had given loan growth range of around 14% to 16% for ‘23. This quarter, as you said, corporate growth we usually have some seasonal uptick in fourth quarter and you mentioned a decent amount of pipeline, which could be disbursed or what would be your outlook on the loan growth for the full year and for ‘23 and maybe beyond, if possible?
Dinesh Khara
I think, I expect that the loan growth should be somewhere in the range of 14% to 16%. I still maintain my expected indication which I had given last time also.
Jay Mundra
Okay. And sir, you had mentioned your excess SLR at INR3.2 trillion and within which there how much would be the scheduled redemption because that is what possibly will help you offset the deposit thing, I mean what could be scheduled redemption amount out of this?
Ashwini Kumar Tewari
The remaining period the redemption will not be much, for the current finance year, it would be just about INR20,000 INR30,000 But we are also adding the same time INR50,000 I think there are investments happening in the SDL also. And broadly, we expect that this excess SLR will remain at this level for some time.
Jay Mundra
All right. No, because, sir, your loan to deposit ratio is now 73. It is lower relatively but it is still...
Dinesh Khara
If at all we put the IBG also -- if at all we look at domestic, it would be somewhere around INR66, INR67 only. The IBG funding is very different. For IBG funding we have to It's -- we run our International Banking Group more like a corporate bank and there the loans are not necessarily funded from the deposits.
Ashwini Kumar Tewari
Predominantly borrowing market borrowings clients.
Dinesh Khara
Predominantly borrowing market borrowings clients, et cetera, et cetera.
Jay Mundra
Right. So, speaking on overseas thing, sir. This quarter, the book has been flattish on Q-o-Q basis, so how should -- and you mentioned that the dollar growth is only, let's say, around 9%. How should we look at the growth in overseas book sir specifically going ahead, assuming in dollar terms, you may explain?
Dinesh Khara
We are very mindful in terms of the NIM which we're generating there and that is the reason, it was a conscious effort, it is not that we don't have -- we're not having opportunities since we are trying to maintain the NIM at -- improve the NIM, that is the reason why we're at this level. And considering the economy which you are seeing across the globe 9.15 in the international space is a decent number. And today, this group is comprising is actually contributing 15% of our total loan book of the bank.
Jay Mundra
And sir. Question on your agri loan growth. So, you're agri loan growth has been consistently lower than overall loan growth, right, in this quarter this is like 11%, 12% --11% and overall loan growth is 18%, 19% or 18% and as of FY ‘22 we were PSL decision now, so what are you thinking in terms of PSL compliance especially on agri side because that growth has been very lack luster whereas the overall growth has been reasonably strong?
Dinesh Khara
There are -- in fact, the way we started working on SMA, we have already started working for agri also, and we are trying to actually work in terms of the realignment of the agri book and that process is already on. Earlier, we were into no value or small value working capital loans only. We have already done about 40% of this book has become agri gold loan and the remaining book also, we are looking at it, how can -- in fact, we are already working on it.
High value agricultural loan as well as getting into agri finance for the agri techs and agri infrastructure, so that is something which we are working on. And this is a result of that conscious effort which has been put in, and hopefully we'll be the question, we have set a target of 3 trillion for the financial year ‘24 for this book to reach, but we are quite hopeful that in this quarter also will get to see a decent growth and we will -- we are much on course as well as our internal target distance.
Unidentified Company Representative
Also, the supplement sir, PSL is also contributed by SMA and affordable homes. So, there are other contributors for the case, only...
Unidentified Company Representative
So, if I can add there, as far as agri PSL is concerned, it's not a challenge. In terms of the agri mandate to 15%, it's not at all a challenge, we all compliant with that. And for some of the other case or subsegments where PSL it calculated from that we have methods like buying PTC, PSL certificates. So that will do, but what agri front, there is not an issue. And to add to what the Chairman said about agri, we are concerned about the quality of agri which would you create or you have seen the agri in TV which is the higher 12.33% that we NPA efficiencies, which you're seeing in the presentation.
So, the color and completion of agri book hasn't changed entirely as of now, remains creating new products. It also means targeted approach towards lifting customers as well as use of analytics and technology. So, all these things are getting so it's getting turbocharged in order to get a better quality sustainable agri portfolio.
Operator
Thank you. We have our next question from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Adarsh Parasrampuria
Sir question was on the exposure, so I'll wait for your comments? Thank you, sir.
Dinesh Khara
Sorry, I missed...
Adarsh Parasrampuria
I said the question was on the exposure. So, I'll wait for your comments. Thank you.
Dinesh Khara
Okay.
Operator
Thank you. We have our next question from the line of Prakhar Agarwal from Elara Capital. Please go ahead.
Prakhar Agarwal
Yes, hi, sir. Thanks for this opportunity. Just two things -- one data keeping, what is the SR outstanding on our book?
Dinesh Khara
Assets have already been provided for whatever assets were there. We have 100% provided for those assets. it's about INR7,000 odd crores.
Prakhar Agarwal
Sir they were provided doing this quarter or they were already provided earlier?
Dinesh Khara
I think last quarter, last quarter. Last year itself we have provided for it.
Prakhar Agarwal
Got it. Sir secondly, when I look at the margins and you probably said that we'll be able to sustain the margins. So, when I move into FY ‘24 should there be cognizant that we should be essentially be equal to average of what we have reported in FY ’23, because we have seen sequential uptick in FY ‘23 at every quarter. So, to that extent, if I were to average that out despite the cost individual happened, we probably be maintaining a similar instrument in FY ‘24, is that a far statement?
Dinesh Khara
That will be our effort.
Prakhar Agarwal
Got it. And just last but on this you're trading so probably, you said that around INR2,200 crores of unwind that we have probably seen this quarter. Now, in Q1 we had around INR7,000 odd crores, so when do we expect the balance to get unwind over a period of two, three years or how we should look at it?
Dinesh Khara
No, we have already provided for the INR7,500 crores we had already provided for that.
Prakhar Agarwal
No, sir of that around INR2,000 crores, you said that that got written back this quarter. So, the balance...?
Dinesh Khara
[Multiple Speakers] doing, which is the right -- It's a MTM part only.
Prakhar Agarwal
Got it.
Dinesh Khara
It will move, it will be a function of that.
Prakhar Agarwal
Sure. Got it. That is, it on my side. Thank you.
Operator
Thank you. We have our next question from the line of Manish Ostwal from Nirmal Bang. Please go ahead.
Manish Ostwal
Yes, sir. Thank you for the opportunity. I have only one question on the short-term liquidity in the market -- intermediate market has tightened recently, and because of that the CD rate has also increased. So how do you see the funding environment in the wholesale market given the busy season in the quarter four?
Dinesh Khara
See, I think as we keep saying our funding of the credit growth, we use various instruments. Deposit of course is the main stage and market volumes is one, but our ability to borrow from the market at very competitive continues to be available to us. And in terms of the deposit. I think there could be some small uptick on the bulk deposit rates and we based on our requirement. we aligned to the market rates. I think broadly, we were able to contain the cost of resource if you see, I think we expect that in Q4 also that time will continue.
Unidentified Company Representative
The other thing which I would like to add here is what Mr. Setty has mentioned, you have observed that in the current financial year, we have already gone to market and raise infrastructure bonds and at a very, very competitive rates. So, I think that also is another source and since we are having a reasonable portfolio of infrastructure assets, that's the other source which is available and which actually becomes much more competitive in terms of cost. So already INR20,000 we have raised, and that is something that will be the strategy going forward also.
Manish Ostwal
Okay. And one small point on the equity capital raise plan for the bank for -- so any plan for that to raise the capital to support the growth?
Unidentified Company Representative
We are as of now, once the profits will be brought back after the March quarter, our rough estimation is faster the capital adequacy ratio is concerned, we'll be at about 14.5%. And at 14.5%, we have made some rough assessments and it indicates that we can support the loan growth of at least INR7 trillion, so we will be very closely evaluating the situation and wherever required whenever required we'll certainly raise all kind of resources, not only equity we will also be looking at 81, 82 whatever is required to be done.
Manish Ostwal
Thank you for the opportunity and all the best for the coming quarters.
Dinesh Khara
Thank you. Thank you very much.
Operator
Thank you. We have a next question from the line of Manish Shukla from Axis Capital. Please go ahead.
Manish Shukla
Yes, good evening and thank you for the opportunity. So, when you said about wage revision monthly run rate was about INR500 crores that assumes what rate of wage inflation 10%, 12%, 15%?
Dinesh Khara
So, 10%.
Manish Shukla
10%. Okay. Second question, sir. On the standard asset provision of INR23,000 crores that you are carrying, roughly how much is it that you would think is additional or extra and under what situation will you be dipping into it?
Dinesh Khara
This provision which we are carrying I would say roughly one is this additional provision for restructured standard accounts, this is essentially for the restructured book, which we are carrying on the balance sheet. So that was -- it is about 30% of our restructure book which is about INR24,000 odd crores. And the remaining one is INR23,115 crores, which is a standard assets, as I mentioned that part of it is on account of our standard test as it is, and part of it is on account of whatever visibility of stress we had on ground. So how long we'll carry will normally take stock of the situation quarter-on-quarter basis and based upon that, we will take a call. It may or may not happen, it may or may not capitalize but depending upon the situations, which is obtaining at the end of the quarter, we'll be taking a call.
Unidentified Company Representative
And majorly it is standalone standard asset.
Dinesh Khara
So majorly, -- yes, predominantly it is further for the standard assets only.
Manish Shukla
Sure, sir and couple of times, you've mentioned that our LDR at least domestic LDR remains pretty low, but at the same time during the quarter, borrowings have gone up by about INR60,000 crores, and you also entered at potentially raising more borrowings. I'm just wondering, given the excess SLR and low LDR, why would you consider raising money via debt borrowings?
Dinesh Khara
This is more of a market operation because we have to evaluate all the options and ensure that our cost of resources remains the lowest.
Manish Shukla
Okay, last question, sir in the budget, the Finance Minister has enhanced limit for certain small saving schemes and introduced a new scheme as well. Do you think that puts pressure on retail deposits for the system either in terms of availability or rate?
Dinesh Khara
Total size of that deposit is about INR2 trillion and when it comes to banking system, banking system deposits are somewhere around INR140 trillion, INR150 trillion plus, so it might have some impact, but not as significant which we should really -- because we have seen in the past when it comes to specialty deposit schemes, there have been always carrying an interest rate which has been quite high as compared to bank deposits, but I don't think it could make a significant dent into the deposit base or the banking system.
So that's how I look at it and apart from that when you keep deposit with the banking system. It is also -- liquidity is something which is available and keep deposit like that, the liquidity is not available. So, it's more like a premium somebody is paying for keeping the illiquid asset, you understand it better, you are into the finance world.
Operator
Thank you. We will now have the address from the Chairman. Please go ahead, sir.
Dinesh Khara
Yes, sure. As far as the exposure relating to large conglomerate is concerned, we have seen over the last five to six years, the share of ex wasn't the Indian public sector banks as a percentry of the total debt has consistently declined from 55% in 2016 to 31% by the end of 2022. During this period, the debt to EBITDA which is a key monitorable has been improving for the better, demonstrating the Group's ability to complete and generate cash in a timely manner from project which in the undertake. As is known, most of the recent acquisitions have been financed through overseas borrowing and market instruments. And so, we don't envisage any risk build up to the Indian banks on discount. As far as we at SBI are concerned, our Group exposure is well below the large exposure framework and the loan outstanding exposure stands at 0.88% of our SBI's total loan book as on 31st of December ‘22.
Majority of the SBI loan outstanding are towards operating assets and projects that have been completed and generating cash accruals, the projects that are under construction are on schedule as of now. The loan extended via SBI are secured by the project assets and there is no facility granted on unsecured basis, the cash flows are routed through the designated accounts, escrow mechanisms are in place to ensure timely servicing of the dues and there has been no record of any delay or default till date. We have not extended any finance against pledge of promoter's equity wherever shares have been pledged in favour of SBI in certain entities there in the nature of additional collateral security.
Non-funded exposure of SBI is mostly towards letter of credit, bank guarantees, both performance and financial, non-guarantees issued towards securing their other financial obligations are no guarantee an issue. There are no concerns on the Group's ability to service the loan book at this point in time.
We hope it clarifies. I hope it is -- I have tried to address the majority of the concerns of all concerned.
Operator
Thank you, ladies and gentlemen, due to paucity of time, I would now like to hand the conference over to Chairman, sir, for closing comments.
Dinesh Khara
Thank you very much to all of you for taking out time and to be with us on this weekend evening, I take this opportunity to wish all of you the very best and have a great and enjoyable weekend. Thank you very much.
Operator
Thank you. On behalf of State Bank of India, that concludes this conference. Thank you for joining us, and you many now disconnect your lines.
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State Bank of India ADR (SBKJY) Q3 2023 Earnings Call Transcript